>> in 2007, eight, nine, the department of homeland security, the first up was a policy decision and only five documents would be acceptable for crossing the international border. the second part was implementing technology that would enable us to check those documents quickly and make sure that somebody was

secure. that's license plate readers, and the primary systems. the implementation of that this hundreds of much of dollars but it dramatically change the border. we now query over 90% of all people crossing the land border. we have reduced fraudulent document attempts. we've increased arrests and to increase security without slowing down the traffic. >> let me quick move on because the want to ask one more basic question. when secretary napolitano was before us very early, two years ago, i asked her, you have enough resources? what would it cost to secure the border? she said she had enough resources. i'm not quite sure of that, so i don't know, is it a matter of resources? secondly, have you ever been tasked with the job of saying this is what we need to do to secure the border? come up with a plan to if we need more offense, how many miles of fence we have to build, this is how high it needs to be, this is how it needs to be

constructed. this is how many boots we need on the ground. have you ever been passed with that? if not, is that you understand what's going to be required with this bill? no, with a plan which i would be scratching my head, we been trying to do this for 34 years, why don't we have that plan in place right now? >> senator johnson, i came back to washington, d.c. to serve again at the headquarters component three years ago. and over the last three years, something that senator coburn mentioned, and really probably within the last six months, asking the various question, what does it mean to have a secure border. we have defined that because as we're transitioning our strategy wikified what that meant to us and our invitation and we will adjust to that depending upon what the in state looked like. within our own strategy, we look at the implementation, it is not a static position but it is not something that one day it secure and the next it's not. it's more predicated on evolving threat and what that risk is.

so the next question i was asked, tell us when the board is going to be secure. my general response to that is when the are no more bad people looking to come into this country illegally between the ports of entry. facet let them i would feel comfortable to come before this committee and others to suggest that the border is security. is not an easy process. i don't offer even in the context of an effectiveness ratio that some of this is a scientific method and i-10 should the chairman and this committee or the american people that at any given time we will be able on 4000 miles of the northern border and 2000 miles on the southern border be able to say with 100% certainty the amount of people that enter end of the number how may people we apprehend. the terrain does not allow it. the fastest when the divorce do not allow. however, we are not, doesn't mean we can't accomplish that. >> i understand it but have you ever been tasked with the challenge of laying out a plan? basically a list. do we have put in place?

can we review that? >> yes, sir. our strategic plan of 2012-2016 was published last may when the first year of the mentation and it's certainly the able to you and your staff. i would love to give a personal briefing on that if you're interested. and even insight into what implementation looks like to include the measures that we've been putting together over the past year. >> why are we looking at this bill to have another plan? why aren't we looking at that and implement in that? >> while, our section, our strategy just be clear only takes into consideration between the ports of entry. we are working with them both cbd and department strategic plan and the principles set forth in the quadrennial defense review. those are all together. that's what an earlier question i feel comfortable that the timelines within the current draft will suggest that implementation is doable because

a lot of that work is done. it's a matter of integrating those. and identifying the definitive in states that defined whether or not the border is secure or not and what those parameters are was those indicators are. to help us gauge whether, in fact, we do need more resources, whether we have to shift resources from one area to the other. >> thank you, mr. chairman. >> good questions but i just want to thank you for coming early and staying late yet again. as we all are, we all are. i want to thank -- walk back in time for little bit with you for asking another question or two. during the eight years i was privileged to be dealt governor of delaware, i would submit operating capitals to -- if they said secretary xyz, governor carper has suggested reallocate your department. for them to sentencing that's not right, this is what we really need. we would've been looking for a

new cabinet secretary. for every president i've seen her since ronald reagan ride of the president obama, there's just somewhat -- once you the chance as a cabinet secretary, these are the resource would like to have, human and otherwise, when the president submits their budget your expect to defend the budget. part of our job is to ask tough questions so we can ferret out where the real resources should be allocated. the fortunate thing here, we're going to have some real money. collect fees, a number of these called for in the proposal by the gang of eight, these proposed by the president. the key is for us to allocate those resources with the risk is the greatest, and the second to make sure we're looking what works and what is appropriate for particular sector into more of that. find out what doesn't work into less of that. >> as long as this plan is in place i think would be an

extremely interesting and to the hearing something on the. let's take a look at the current plan that border patrol actual has in place, let's evaluate that and see if we can't throw that in the bill. >> and actually if you look at what's in the gang of eight and the administration, one of the things, the plan for the department is don't just look at the areas between ports of entry. put some resources in the ports of entry where you've got thousands of trucks, cars, vehicles, pedestrians coming. so that's part of the plan. i think it's one of the things we'll do. you're right, this is a shared responsibility, shared by administration. i'm encouraged we're doing some real smart things. will it ever be 100%? i don't think so. can it be perfect? probably not. can we do a better job? you bet we can. we're getting a lot of good

ideas and i think it's just a good spirit. i'm encouraged with what i'm hearing and from both sides. i've got a couple of questions i want to ask, you're welcome to stay longer if you'd like. i want to go look at the issue of these overstay. most of us, most people, most of in this country, do you think how service of a problem that people comment on a student visa, a tourist visa, maybe a worker visa or whatever and they simply overstay there, not just their welcome but the legal limit. as it turns out there's a bunch of people who fall into category. my understanding is that number is rising. it's not like five or 10 or 20% of those who are here illegally. 30 or 40%. did anybody give me a number on that? again, we call these overstay. how big of a problem is that?

>> center, you asked a great question. it is a question that people have asked going back 20, 30 years, which there's an interest in the federal government and publishing visa overstay numbers, and we talked a little earlier, you may been out at a vote, about how we identify a track overstay, which the system for doing it. basically mapping electronically and running it against some databases to ensure that the person has even left the country or still resides in the u.s. that process for identifying and tracking overstays has been one that's been long coming and it has been a number of requests by congress to identify that system, to develop that system. and it is only built i in the lt two nfc is probably that we've

actually been able to build the system that allows us to the fidelity of that data so we can actually publish it. it hasn't been published yet. we have committed to getting those numbers out by the end of this year for the first time in the government's history. we've done that by an entire department working together to automate the system of tracking entry and exit, linking up databases, improving our matching algorithm and we will be able to publish that information later this year. >> it would be nice if you could give us some insights on the question before the end of this year. you want to add something? >> one of the advantages is matching visa categories with the demand, having a work enforcement regime whether tough enforcement so that isn't a magnet for folks to overstay and then priorities when someone

overstays we will be able to identify and remove him. the balance this bill we think would be effective. >> here's an idea. senator johnson, i made this before but i just want to share with you here again today. in my old job as, i don't we start appearing trained literally when a newborn baby came into this world, hospital. we did follow up parenting training in thousands of homes, especially high risk situations to make sure moms and dads have the skills they need. we provided i will call it like cliff notes on how to raise your baby in terms of checkups, immunizations, food, diet, all kinds of things for the first five years. it was like five years of cliff notes for raising a newborn baby. we had much smarter ways to do this thing now. johnson & johnson has come up with something called touch for

baby. the ability to send her a new mom, dad on their phone using texting reminders, you have a doctors checkup coming up in two weeks. or you have a doctors checkup coming up tomorrow. immunization, your baby should be getting this in the nation today, tomorrow, next we come next month. all kinds of things using text for baby. almost everybody, especially younger people have cell phones. they do a lot of texting anyway. it's a quick tool, very cost effective, like a digital solution, a digital successor to what we were doing on paper 15 years ago. one idea i heard was done on the border somewhere on this, was an idea, why don't we do a similar thing with people who are here legally but not forever, they are not your government status, they're a student, a visitor, a tourist, a worker?

and to send them a reminder, text them, you've got a month to go under visa, you've got two weeks ago, you've got a week ago, you've got a day to go. the idea that people know that we know they're here, we know the time is running out and we're watching them. that could probably do something positive. that's an idea we talk about a lot of technology, there's one that might be, a different kind of way. ports of entry, we've already talked a little bit about that, but talking to 3500 new officers at ports of entry. what can you all tell us about problems -- how these officers might be employed and what kind of improvements we can see on border patrol and legal trade and travel? where are some of the longest causing delays on the southwest border? how much do they hope to reduce those times? >> thank you, chairman. i'll take a shot at that.

as former acting commissioner for field operations and to senator johnson's question, have you ever been asked what do we need to resource wise to secure and facilitate legitimate trade and travel, that was a question we're as with the workload staffing model and resource optimization strategy that we submitted with the fy '14 budget. and it identifies a need for 3477 officers at ports of entry and they would be deployed based on the greatest need. that's determined by the workload, by enforcement result and the growth of facilities and also risk. so it's a combined formula that is incorporated in the model. we have some significant way time challenges as you noted, drink you in the air environment we've seen air traffic grow 4% a year for three years in a row tickets expected to hit that mark again. will be over 109 international air travelers. the wait times have grown commensurate with that. even non-millennial, above the traffic growth. so we need to keep pace.

we have available booth. we have the of research at the airport. we want to put additional staff that will lower the way to the sequestration is give us an example of what happene happense cut staff, what doesn't, dramatically in many other major airports during the day. we would like to counterbalance that of not only getting back your current level but to go beyond that with the proposal of the 14 budget. on the land border been able to staff all boost at our key crossings not only did the peak period leading up to that peak and extended beyond it will balance out our ability to process the traffic, reduce wait times up to four hours right now on certain high-traffic days. we need to get those down as we commit your trusted travelers ca,getting a shorter crossing, 5 minutes or less. >> in terms of best bang for the buck, let me follow up on your response. in terms of best bang for the buck, force multiplier's, investment, what is this

technology or infrastructure at ports of entry, best bang for the buck. we saw a gamma ray devices. we saw mostly horrible handhelds that are able -- portable handhelds, as a truck came through, maybe somebody sent to the officer who will talk to the driver. literally having a handheld, the border, the drivers visits to the board. impressive stuff. just some of the ideas, technology ideas could be handhelds, could be others. what are some of best force multiplier's with technology and infrastructure we're looking at at ports of entry? >> you hit on two of them right there, the mobile technology, we have proposal for increased mobile technology. that takes a system and support right to wear the officer is doing the work. not chaining him to a terminal. additionally, the improved equipment where we can run vehicle through very low-level

but still be able to detect any anomalies. then the third thing that's in the budget that is critical is this concept of pedestrian reengineering using kiosks so that when a pedestrian approaches are officers they've had the documents check. they've already had the system checks run so we can process them about 30% faster, shortness those lines in the people moving more quickly with advanced technology. >> senator johnson from my time has expired. but in terms of your point earlier, we want them, the department if you will, to tell us what their plans are. some make sense to me. it seems -- and looks like we'll have some resources, they have a plan, a lot of commonsense steps. so i think we might be onto something here. >> a quick question. i have not been counted supported with you but that was one of the first trips i made.

but m my impression first always inadequate offensive but i could not believe, we didn't have the high ground to either. but saw the beautiful port of entry that was being constructed but some of the input from the agents work, we've got infrastructure, we don't have the manpower. just very quickly to in terms of your planning, you say you wanted, was a 3400? where are we at right now? >> national its 21,775. >> but in terms of port of entry. you're talking about a plan you needed 3474, i tell them of the exact number. >> the numbers are very similar, 21370 for border patrol agent, 21775 for office but it would be a significant increase, about 18% of our staff. >> that you think would actually publish the objective? >> that would help us catch up with the tremendous growth in trade and travel and secure that anthatin a much more effective d efficient way. >> so without personages, just

numbers, how many additional agents to we need an actual ports of entry on the one hand? then in terms of controlling the borders and between the ports of entry. give me just numbers, what do you think you need? >> versus where we are today. >> versus where we ar are today, when you can increase of roughly 3500 cbp officers. >> total, and is at ports of entry? >> that is the ports of entry. >> what about between the ports of entry? >> a lot of that has to do with the about of technology that's going to be online here in september. sorry, in the spring and fall both in terms of mobile video surveillance systems. we have the integrated six towers coming online scheduled for fall. we have replacement with remote video surveillance systems on previous polls on the border so a lot of that once we start taking a look at getting that technology then we take a look at what is the response, require going to be in terms of border security. once we have that last on technology will be able to

assess where we have a sport patrol agents to the other piece which is critical is the deputy commissioner mentioned the border patrol staffing right now is 21,370. what's more important than the right number is to have those agents and the right location given our risk assessment. the attitude that is no. i want to be without the flexibility and mobility with those agents to move agents in areas that we have already have identified as low risk and i think given the measures in some of those areas like el paso sector and yuma sector, be able to move agents from one location to the other which may not require an additional increase of 21370 but a reevaluation. >> why do you not have, you don't have flex building a. why not? >> for a couple of reasons. one is to move money is required in the border patrol agents in masks. i'm talking hundreds of border agents from one location to the other. it was inevitable in 13 and it

doesn't look like at this point it will be available in 14. the other thing is -- >> so that the resource issue as opposed to policy issues? >> part of it is resource issue. the other piece because the vast majority of agents i want to move from one location to another are part of the bargaining unit. it would require negotiations. the other piece also we just don't have the ability overnight to move wholesale all those agents into those locations and maintained them in that location for a long period of time. these would be permanent moves as opposed to just a short 30-60 date temporary assignment which we do currently. >> i understand what i ask questions, do you have enough resources and people need to defend budgets. i get that. but i will still try again. not in terms of dollars but manpower. i'm just trying to get some sort of sense if you haven't total wardy 2000 agents, 21, 21. you need another 3500 ports of entry. are we talking about thousands

of additional agents or are we going to really secure the border? again, realistically. my concern is the american people have no faith we will ever secure the border. i'm just on to get to the point in how many boots on the ground will it really take? is going to be 42000? 50,000 bucks 100,000? can you just give me some sort of ballpark since and give the american people a ballpark sense of what is going to take to finally once and for all and again, never perfect understand the basically to total operational control of the border, how many people will take? >> it's very difficult for me to answer that question directly because it really depends on what you mean by truly securing the border and significantly securing support. spin where you would be satisfied. where the american people would be satisfied to were not looking at another 10 million illegal immigrants down the road. >> i'm going back to identifying what the in state is going to be and is basically let me show you

at least a pendulum discussion i've been involved with over the last couple of years having come back. one is when they talk about securing the border in their mind, i'm not talking about committees, and about community members, trying to implement the strategy and what the in state is going to be. be. there are those that would suggest we have to 100% stop and prevent everybody coming across the border. if it is the in state and that's people's minds of operations go overboard security, i have no idea what the boots requirement are going to be. >> how about with the goal laid out in this bill? in terms of what we're talking about there? with that goal, how many people? >> my staff has been look at unidentified what the requirements are going to be under some the draft

legislation. assuming that we look at at a minimum 90% or greater in high-risk areas and given the flexibility to border patrol and within cbp to reallocate those resources that we already have, and to make sure we optimize the capabilities that we have, whether it's technology in the air, whether it's the integration of all the technology, i would be in a better position to answer that question once that is done but i don't have the answer right now. white frankly i don't think it's just a matter of another 4000 border agents and, therefore, undefined we be able to achieve the in state. >> i understand by appreciate your working with me on this one. thank you, mr. chairman. >> i'm going to follow real briefly on that. sometimes when we hold hearings our witnesses have an opportunity given opening statement. sometimes i like to give them a chance to give a closing statement. we normally get about five statements for an opening statement. i'll give you about a minute for a closing statement.

they can be reflecting back on some the questions we've asked you, some of what you heard said or not said that you like -- chief, i will ask you to join us. going back through a very good line of questioning from senator johnson but i don't know there's one number for number of human bodies. i just don't know that there is a good number. and i don't know that there's anyone technology what happens to be handheld or happens to be these detectors, these gamma rays that allows to look into trucks or whether it's our ability to measure radiation coming out of vehicles. i don't know that it's drones or aircraft. i don't know that it's just flexibility i don't know if it's just money. it's all the above. it is all of the above. we have an opportunity to do it all of the above policy.

in a budget constrained world, ask this question, what works, what do we need to do more of, maybe a little less of? part of the image here is some of the flexibility. one thing that is tough as you think about it, if you want to the folks were on board the people, fly them from eastern parts of texas over to yuma. they have families but most of them has families. you just gets it okay, we're going in the view from houston, texas, edge put you over in yuma for the next three years. by the way, i know you have kids and for me, too bad. you just can't do that. there's a human side factors in as well. just a couple of comments and that is a very important line of questioning. one less question i will ask before ask you to help me give the benediction, but based on, this goes back to metrics.

there's been a lot of discussion on metrics. i won't belabor that buddy to have a question. based on the data you have available, can you answer the question, expert witness posed, and namely, where are the vulnerabilities for increased illegal immigration, the largest at the ports of entry? between the ports? or through the visa overstays. and maybe if you can say of those three, ports of entry, ma between the ports or those who are here, came legally but are no longer legal status, maybe give us an idea what should be our top priority in terms of all the billy, maybe number two, maybe number three. i don't know, ms. richards, many of you fair question to ask of you. if you'd like to give a shot, go ahead. >> i think i would defer to my colleagues. >> fair enough. mr. ragsdale? >> just putting and into risk,

we know it would be the concern for law enforcement side budget folks between the port of entries certainly have conversations about -- certainly at the port of entry come so we know a fair more about those folks. similarly with the folks that overstay, they're coming through a port of entry so if i had to rank them, and again, very difficult to talk absolute but that's probably the ranking. >> chief? >> mr. chairman, with respect i think i would have a deputy commissioner talk in terms of cbp, last i show my parochial answer and say it's in between ports of entry. >> okay. mr. mcaleenan? >> to that point, mr. chairman, i think debbie director ragsdale laid out the different environments between the ports of entry is fast and uncontrolled and we very much appreciate your visit to the

board and your engagement with our vision and our personnel there. it is a controlled environment where have an opportunity to question and query travelers entering. so we know more about them and more about their admissibility or not. obviously, i think the sectors d leg of the efforts on the overstay along with secretary ragsdale that are critical. that's why the bill, attacking this and all the angles is the best way to before because it needs to be a comprehensive solution. >> very briefly. >> you have a choice between ports of entry or not ports of entry because people who are visa, who have visas to come to the ports of entry. and in the last few years we've done made significant improvements in now talking, identifying, and sanctioning those who are overstays and will continue to make progress on that. we have real-time ability to revoke visa, to put caps out and to go up for folks after law

enforcement purposes but it's between the ports of entry or unlawfully present and willing to break the law that we have the most concerned about. that's what i put my concern there. >> i will come back to you, this is a chance for you to give a closing statement if you wish. we haven't had come heaven as you as many questions to you can take a minute or two if you'd like. but again, we very much appreciate your being here. >> i think in closing i would reiterate some of the points that i made earlier. the gentleman on the panel all talked about the various policies and procedures and thinks they're putting in place in new technologies, strategic plans, the determination that they're making on the number of agents they need between the ports and at the port, and i would go back to the necessity of doing these plan very carefully and in full detail. i think that that is the way to success for the department to think through what they are

doing it for they spend the money, before they make a commitment to hire a certain number or have drones versus manned aircraft. i think they need to really go through the whole planning process very carefully first. and i think that they will. >> thanks. >> thank you. i would just note the comprehensive approach is a sensible way to go. .. >> for special agents and the criminal investigative area as well as the civil immigration and enfonsment side is all

balanced so we talk a comprehensive approach. >> okay, thank you. chief? >> what would you do, how would you implement with the money that would be perhaps attach inside both the authorization and appropriations process. before i answer that, um, i think it would be fair to tell you what our end state vision is in terms of our strategy. one is when you look at secure border, what does it mean in our current operation. is, one, one that reduces the likelihood of attack to the country and, second, provide security and safety to the public. there would be three things we would continue to build within our implementation plan with this bill. first and foremost, our ability to increase detection and mobility. and we are also leveraging with the department of defense, with the memorandum of understanding that was recently signed last year and starting to get equipment that was previously purchased by the taxpayers that we intend to use and test for

our border security in mig, augmenting -- mission, augmenting those things we have already received in the department. that would be the first thing. the second thing is flexibility to deploy what, what type of technology and how we deploy that in different areas. we've got to have that flex be about built in because it's not a static state. and a third, less talked about capability that we within the border patrol have to get better at, and it may not be so much in terms of dollars, but proficiency is our ability to increase our analytical capability about what all the measures mean and how do we take automatic tough that we collect -- all the stuff that we collect leveraging both in terms of what the department has in experience and what cbp has and building greater capability to understand the analytical framework in which we design and implement our operations to really understand what the measures mean at the end state. but thank you for the

opportunity, sir. >> thanks for coming back and joining us today. thanks so much. [inaudible] >> mr. chairman, thank you. i would like to agree with you, first be, that i think we are on the right track, that we have many of the fundamental foundational elements in place across the different pieces of this and this immigration reform approach gives it a chance to bring it together in a comprehensive way. really appreciation your leadership. i think the chief or very well covered what we need to do next. thank you for your opportunity that you gave me to talk about the ports of industry. we've got to be as efficient as possible. we identified our staffing needs, need to awe ply them appropriately. -- feed to apply them appropriately. and really with that, looking forward to continuing to work with you and your committee. >> yes, thank you. mr. secretary. >> mr. chairman, thank you for giving us an opportunity to put

forward, i think, a good story about our ability to secure our boarder. we have made substantial gains in border security in the last daled, in particular the last three or four years. we see that apprehensions are historically at their lows. 49% down in the last four years. seizures at record highs. border crime significantly decreased in border communities. and by all accounts, that is a good story, and we should be moving in that, continue to move in that direction. i think, look, the border is a living, breathing, permeable membrane that allows us both to sustain our daily lives through the goods and things that come through in the business transaction, but also to protect us against those who would do harm. we want to be able to expedite lawful trade and travel and interdict threats at the earliest opportunity. the department of homeland security makes that a principal mission. there's no single solution

that's going to allow for that complex and important mission to be accomplished. but i think this comprehensive immigration reform bill provides the best opportunity. because there's no single solution, you need a comprehensive approach. you need to address the magnet that attracts people here for illegitimate work. we need to address the visas that are perhaps out of line and have been for a number of years. and we need to address the security and continue to build on as we've talked about here the technology deployment, the resources to secure the border. i think this bill does that. it's comprehensive. if it were easy, we would have done it 20 years ago, 10 years ago, today. it's not, but this provides us the best path forward, and this administration supports and will work with you to get it done. thank you. >> thank you. thank you very much for the that statement. and a brief closing comment of my own.

the, we're -- i'm reminded of a couple months from now it's going to be blazing hot down on the border. it'll be 120 degrees. the sun will be bearing down, and the men and women who are serving us will be there to do their jobs. during times of this year when we had monsoon rain, very hard rains, they had a drought down there. but when it was raining hard or even hailing or what, they'll be there doing their jobs. if rocks are being thrown at them, people are taking shots at 'em, they'll be there. good weather, bad weather, day and night. and we need to keep that in mind and just to, again, express you you -- through you our appreciation for the regular work that's being done. and for the most part ten in a very good spirit -- then in a very good spirit. people take pride in their work. i've been very encouraged just by the spirit of the men and women that air talked to whether it's california, arizona or

texas or up on the canadian board. very uncouraged. encouraged. we aspire to, i know you do too, to be nearly perfect in the work that we do. that's probably not achievable here. i was in place along the rio grande river last week where you could put a border patrol officer every 50 yards, every 100 yards, and it would be tough to be able to stop everybody from getting through. does that mean we don't try? no, no. we have to be smart, think smart, figure out where the risks are, where the risks are highest, allocate the resources that make the most sense there. and we have an obligation here to ask tough questions. we're stew worlds of the -- stewards of the -- resources of the people in this country, taxpayers, and the good news is we're going to have some extra resources. and the question is how are we

going to use those resources, where are we going to invest them. you can help us decide how to do that, and you've given some great answers in previous exchanges and, frankly, a number of other good ones here today. so as we close, i'll just say i'm not discouraged, i'm encouraged, and there's a very good spirit here in this committee, and i think -- i hear from the responses here that there's, actually, the makings of some pretty good comprehensive, all hands on deck approach, all the above kind of approach that makes a whole lot of, a whole lot of sense the last thing i'll say, i might be wrong, but i think the people who say if we had a smart, comprehensive immigration policy in place, one that actually allowed people to legally go from mexico into the united states to work for a while and then go back, go back home where a lot of them want to go anyway, that would be, would be helpful. to the extent we had a situation where somebody comes to this country to go to school, go to

college, gets a degree, maybe an advanced degree in one of the s.t.e.m. subjects, they actually had the opportunity, had a chance to stay here, you know, the idea of stapling that green card to their diploma, that, that's going to help a little bit, too, in terms of those folks that overstay their visas. but i want to thank you all for joining us today. thanks for the work you do, and a special thanks to anne richards, the real anne richards. i served as governor with former governor anne richards and had great affection for her. your presence reminds me of the great service she provided for the folks of texas and our country. i understand that the hearing record will remain open for another 15 day, that's until may 22nd at 5 p.m. for the submission of statements and questions for the record. and with that, we're going to adjourn this hearing. thank you all very much.

[inaudible conversations] [inaudible conversations] >> the senate judiciary committee begins marking up the immigration and worlder security bill this morning -- border security bill this morning. you can see that online at c-span.org at 9:30 ian. and the house homeland security committee holds a hearing on law enforcement's response to the

boston marathon bombings and how federal, state and local officials share information. that's on c-span3 at 9 a.m. eastern. >> the first first lady to earn a college degree, and during the civil war soldiers serving under her husband call her the mother of the regiment. opposing slavery, she influences her husband to switch from the whig party to the anti-slavery republican party, and she hosts the first annual white house easter egg roll. meet lucy hayes, wife of rutherford b. hayes, as we continue our series on first ladies with your questions and comments by phone, facebook and twitter monday night live at 9 eastern on c-span and c-span3. also on c-span radio and c than.org -- c-span.org. >> in a few moments, a discussion of how automatic spending cuts would affect military readiness and training. and in an hour, the peter peterson foundation hosts a

forum with former president bill clinton and microsoft's bill gates. >> now, deputy defense secretary ashton carter announced sequestration budget cuts will set the defense department's strategic authorities. he said they would seriously affect military readiness and training. this is an hour. [inaudible conversations] >> good morning, everyone. and welcome to the national press club. i'm gene ty from the speaker's committee. i want to welcome another one of our newsmaker events at the press club. we are, indeed, honored to have with us the deputy secretary of defense, ashton carter. dr. carter was confirmed as defense secretary, excuse me, as

deputy secretary of defense in october of 2011 after serving as undersecretary for acquisition, technology and logistics since principle of 2009. dr. carter's a very lauded and longtime, well known defense official to most of you, and i'd like, if possible, to have a few questions after he finishes with his remarks. and, please, direct those questions to the subject at hand, if you would, please. let's give a big national press club welcome to secretary ashton carter. secretary? [applause] >> thank you, gene. and thanks for the opportunity to be here once again at the press club. one month ago it was now, secretary hagel gave a speech at the national defense university that described the major strategic and budgetary challenges that, and choices -- and also opportunities -- that we as a defense enterprise face.

and be i'd like to pick up -- and i'd like to pick up where he left off in the one of what will undoubtedly be a series of discussions that extend over the spring and summer as we in the defense department with the congress work together to try to put a stable and solid foundation under the strategic transition that we are embarked upon as a nation. as president obama made clear in the new defense strategy, we announced last january, we're turning a corner, a strategic corner. finish from a post-9/11 era dominated by two wars in iraq and afghanistan, to the challenges and opportunities that will define our future in security. we know what many of those challenges are; continued

turmoil in the middle east, the persistent threat of terrorism, enduring threats like weapons of mass destruction and new threats like cyber. we also see great opportunities. among them, the opportunity to shift of the great weight of the department of defense both physical and intellectual. that has been devoted to iraq and afghanistan to the asia pacific region. where america will continue to play its seven-decade-old, pivotal, stabilizing role into the future. to develop innovative new capabilities from a vibrant defense technology base, to capitalize on the lessons of the last decade on how to use forces innovatively. including special forces and the integration of intelligence and

operations. to manage presence in new ways. to leverage the reserve and guard components that have performed so superbly over the last decade. and to build the capacity of partners and allies so that they can shoulder more of the burden. the this great -- this great strategic transition which we need to make coincides with the need to absorb some reductions in defense be spending in the interest of the nation's overall fiscal situation. these two great historical currents are coming together, and it's my view that they can, if manged properly i -- if managed properly, reinforce one another. that's the task before us in the department of defense. in terms of our responsibility to the american taxpayer, we

know that in making this strategic transition we only deserve the amount of money we need and not the amount of money we're used to. that's why well before the current budget turmoil, we made reductions to the department's budget by $487 billion over ten years. this half trillion dollar adjustment came on top of significant adjustments that secretary gates made to eliminate unneeded or underperforming acquisition programs. now at the same time, our overseas contingency operations funding -- which is not included in the base budget and which is largely for iraq and afghanistan, otherwise known as wartime supplemental funding -- is also decreasing. now that we have exited iraq and

are drawing down our forces in afghanistan. taken together, these reductions compare and pace in magnitude to historical cycles in defense spending the nation has faced in the past, after vietnam and after the cold war. in order to execute the president's defense strategy and to responsibly prepare for reductions in defense spending, we need to continue a relentless effort to make every defense dollar count. i began this effort in acquisition when i was the undersecretary of defense for acquisition technology and logistics under the title better buying power that continues under my successor, frank kendall. extended throughout the entire d., this means making hard choices and persuading our own bureaucracy and ultimately the congress to support even the

very hardest of them. in acquisition we made important changes to control costs like setting targets for what systems should cost, a notion we are applying to the joint strike fighter, the ohio class replacement missile submarine and the new strategic bomber to avoid outcomes like the v871 helicopter which ballooned to the point where it became unaffordable. we also gave renewed emphasis where appropriate to greater use of fixed price contracts, an approach that we applied to the kcx, now the kc-46 aerial refueling tanker competition. we also learned from the wars in iraq and afghanistan hard-earnedless szobs in speed and agility -- lessons in speed and agility. we delivered the all terrain vehicle, mrap atv which went

from commander's need to production and fielding in less than ten months, largely bypassing the ponderous acquisition system. of course, the most important savings achieved through the mrap program were in lives saved. and the devastating injuries avoided, something that's truly priceless. outside of acquisition, there are many be other areas in which we simply must do better. making better use of taxpayer dollars is important not only in its own right, but it's also important for the taxpayer's confidence that they are getting full value for their defense dollar. this is a confidence we must earn to get the public and congress to support a reasonable level of defense spending such as the president's budget

contains. and for this reason, i begin at the department's entire leadership begins, with driving down tail to strengthen tooth. in this regard, we are placing a great emphasis on reducing the cost of what we in the pentagon call the fourth estate which consists of the office of the secretary of defense, the joint staff, the staffs of the combatant commanders and the defense agencies. the fourth estate represents a fifth of the department's budget, and it merits at least as much scrutiny as the military services budgets. there are real savings to be realized here. next, we must drive down health care costs across the department. we have achieved substantial reductions in recent years, largely by holding down costs we spend to buy pharmaceuticals and pay health care providers, but also through modest increases in

fees and co-pays assessed to beneficiaries. as a result of these and other effort, our fiscal year 2014 budget request for the defense health program at $49 billion is more than $3 billion lower than the fiscal year 2012-enacted level of 53 billion. in contrast, health care spending in the broader economy continues to grow faster than the overall rate of inflation. but we need to do more, and to that end we must look at ways to pick more efficient use of beds, staffing and facilities at military treatment facilities. and, again, at health care fees. we also need to restructure our civilian work force as we restructure our fighting forces. specifically, we plan to reduce

civilian work force levels by between 5 and 6% over the next five fiscal years. these reductions are largely proportional to military end strength reductions that we've proposed. because they are con opportunity gent in large -- contingent in large part upon our ability to consolidate our infrastructure and restructure our military treatment facilities, we will need a background to achieve them. given this connection, we are submitting our request to congress for a background in 2015. as secretary headache l recently -- hagel recently testified before congress, we believe brach is a tool that allows communities a role in decisions for their property and provides redevelopment assistance. brach requires an up front investment, and for that reason the future year defense program adds $2.4 billion to pay for these costs. but in the long term, brach

rounds have consistently generated savings. the previous five rounds are saving $12 billion annually, and those savings will continue. now, i realize brach is not exactly a crowd pleaser, and people often say to me how can you propose that. and our answer really is how can we not propose that. how can we not propose the cutting of tail and only the cutting of tooth? finally, everyone who looks at the defense budget realizes that military compensationing, like health care costs, cannot grow at unsustainable rates without threatening the force. we are, therefore, resubmitting a new package of military compensation proposals that we believe address congressional concerns raised last year. none of these new proposals would result in a reduction in pay or benefits. they simply reduce the rate of

growth. specifically, we are proposing a modest reduction in the growth of military pay by implementing a 1% pay raise for service members in fiscal year 2014. and a modest additional uncrease in tricare fees and -- increase in tricare fees and be pharmacy co-pays as i alieud to above -- alluded to above. these would be phased in and at maximum limits to allow service members and retirees to adjust accordingly, and they would be grandfathered if appropriate. allergy season. just as we are redoubling our efforts in fiscal year 2014 to obtain greater efficiencies in defense spending, we're also deep bing our program alignment to the president's strategy the. let me remind you what the key

tenets of that strategy are. the first is that as we draw down from the wars in the iraq and afghanistan, our force needs to be -- to make a very difficult transition from a large, rotational, counterinsurgency-based force to a leaner, more agile, more flexible and ready force for the future. that's not to say there's anything wrong with the force that we built for iraq and afghanistan. it was the right force for the period. but this is a different period. as we make this transition, we want to preserve what we've worked so hard to achieve in the last decade. first, the tremendous strength that the all-volunteer force has brought to this fight over the last ten years and the qualities that they embody. second, the use of special operations forces and their integral application in modern operations. third, the contribution of the guard and reserve.

we use the guard and reserve in this era in a way never foreseen, and they performed superb limit -- superbly. i've been to iraq and afghanistan many tombs -- i'll be leaving again day after tomorrow -- and you can never tell the difference between an active duty and reserve component unit in terms of their proficiency and dedication. fourth, the fusion of intelligence and operations, an area where we have unrivaled capability. and fifth, new and disruptive technologies all conceived and fielded over the past decade. this is the legacy of iraq and afghanistan that we want to preserve and adapt as we turn the strategic corner. second key tenet of the new strategy has to do with protecting and prioritizing key investments in technology and in new capabilities.

president obama insisted that we go out of our way to protect our newest investments because these kinds of investments tend to have the shallowest roots. ask are, therefore, most susceptible to being bureaucratly uprooted. because these investments are so important to keeping the technological edge which so much of our national security depends on, the president wanted to insure that we didn't eat our seed corn in the process of reducing our budget. in this regard, we are continuing even in our current budgetary environment to grow our special operations forces. a portion of somewhat larger force will be redeployed from iraq and afghanistan to locations around the world. the remainder, not unimportantly, will have a chance to reset and be home with family more than they've been able to do over the past decade. next, we're increasing our investments in cyber in reck education in of the growing threat that -- in recognition of the growing through the that it

poses to our infrastructure. i said increasing our investments in cyber our fiscal year 2014 budget request adds manpower to create cyber teams in our three functional areas, namely defending department of defense networks, degrading adversary cyber capabilities and supporting the defense of the nation's critical infrastructure. space is also an area where we have a large installed base on which we depend, and we need to figure out how we either defend it where that's possible, or where it's not possible because of the nature of orbital dynamics and the be ip hernt vulnerability of an object in space be, how to operate without it be we need to. we're also developing options to counter the space capabilities of potential adversaries. another area where the president, that the president wanted protected is countering weapons of mass destruction. we still have --

[inaudible] program, and it's very active and operational. we're also investing in intelligence surveillance and reconnaissance platforms. you see the predators and reapers at work, you see the global hawk which is the higher altitude platform, then there are other things you don't see. we have an innovative effort to increase the range of our unmanned vehicles and to operate unmanned vehicles from ships and other areas of innovation in many isr that don't involve unmanned aircraft, but other techniques. finally, we're increasing our investments in certain areas of our science and technology portfolio such as electronic warfare, any jamming capabilities in command, control and communications. it's always opinion the case that the department of -- been the case that the department of defense contributed to innovation at the national level. today there's a larger commercial technology base relative to dod's than there used to be and, of course, the overall technology base is global. but still and all, there's a

leadership role for the department of defense, and despite our fiscal challenges, this is an area that'll remain a priority. the third key ten innocent of our new defense strategy concerns our rebalance to the asia pacific region. our rebalance, to be clear, is predominantly a political and economic concept, not a military one. but since i'm the deputy secretary of defense, i naturally focus on its security aspects. and in the security sphere, the logic of our rebalance is very simple. the asia-pacific has largely enjoyed overall peace and stability for 60 years. part, of course, from the vietnam war. and the only exception to that today, and a dangerous one, is north korea. we're responding to north korea's threats. we're doing it by defending ourselves and our allies. we're taking a firm but measured

approach. but north korea's an exception, really the only exception in terms of imminent nation-state aggression in the asia-pacific region. this climate of peace and stability has prevailed in the asia-pacific region for so long despite the fact that there's been no overarching security structure, no nato to make sure that historical wounds which were deep in asia were healed after world war ii. and and during those years, first japan rose and prospered, then south korea rose and prospered, then many nations in southeast asia rose and prospered. and today india and china rise and prosper. and all this has been welcomed by the united states. but none of this was a foregone conclusion when you consider

where asia was at the end of world war ii. while the asian political and economic miracle was realized first and foremost by the hard work a and talent of the asian people themselves, it was enabled by the enduring principles that the united states has stood for in the region and also by american military power. the principles we've stood for have included a commitment to tree and open -- free and open commerce, a just international order that emphasizes rights and responsibilities of nations, fidelity to the rule of law, civilian control of the military, open access by all to the shared domains of sea, air, space and now cyberspace, and the principle of resolving conflict without the use of force. in addition to these principles, it was also enabled by the pivotal role of u.s. military power and presence in the region. we believe that our strong

security presence in the asia-pacific has provided a critical foundation for these principles to take root. and in one sentence, our rebalance says we're going to continue to poi provide this -- provide this foundation for decades to come. our partners in the region welcome our leadership and our robust engagement and the values that underlie them. and, therefore, i believe that our rebalance will be welcomed and will be reciprocated. it's good for us, it's good for everyone in the region, and it includes everyone in the region. and by the way, it's not aimed at anyone in the region. no individual country or group of country. our balance, our rebalance is reflected in force structure decisions, presence and posture, investments, innovations in our operational plans and tactics

and perhaps most importantly, in the work we're doing to strengthen our alliances and partnerships in the region. i've given a number of recent speeches here in town and in asia that describe each of these lines of effort in significant detail. and in the interest of time, i just refer you to them. but needless to say, there's a lot going into this undertaking. and when i'm asked to discuss it, asked about the rebalance, i'm usually asked two questions. the first is, can you do it? can you do it with the budgetary challenges that you face? and the answer to this question is, yes, we can do the rebalance, and here's why. first, as i mentioned earlier, we're shifting that huge weight that we have applied to iraq and afghanistan to the asia-pacific region. and a second reason is that within our budget, which is

still substantial, we are making investments in this region a priority. next, fission to the current -- in addition to the current weight of our defense spending, you also have to take into account that it has accumulated over time. it takes decades to build a military capability like ours. and it's also true that in addition to having substantial resources, our force be has substantial operational experience which no other military can match. so for all these reasons, we can do it. and the second question i get is, isn't our rebalance really about china? and the answer is, no many, our rebalance is not about china. the rebalance is not aimed at anyone. any individual country or group of countries. it's about insuring the peace and stability that the asia pacific has enjoyed for 60 years continues.

now, in a normal budgetary environment, efficiencies and strategy-driven approach to defense such as i've described and which is reflected in the president's budget would be sufficient. but this budgetary environment is anything but normal. particularly because we're operating under the sequester. sequester is not only regrettable in its own right, but it distracts from the true strategic and managerial tasks that are upon us. sequester requires us to subtract from our budget for the remainder of fiscal year 2013 $37 billion. and it presumes that we take equal shares or proportionate shares from each and every part of the budget which is the worst

managerial approach possible. secretary hagel and i, excuse me, and the entire leadership of the department are doing everything we possibly can under the this deliberately restrictive law to mitigate can its harmful effects on national security. everything we possibly can. for example, the president used his authority under the law to exempt military compensation from sequestration. we also must, of necessity, fully protect funding for our forces in afghanistan and other ongoing operations, and we're doing that. it turns out that our afghanistan war costs have been higher this year than we anticipated in part because of a higher-than-expected operating 'em poe, and in part because of increased transportation costs due to the extended closure of the pakistan ground lines of communication.

next, we're fully protecting wombed warrior programs -- wounded warrior programs. we're fully protecting our core nuclear deterrent. critical portions of homeland defense like the ability to interdict hijacked airliners. some special operations forces and other critical capabilities. and we're fully protecting key other expenditures such as those, for example, that will allow school children in our military schools to finish the school year such that their attendance can be fully accreditedment -- accredited. next, there are things that we're preferentially protecting to the extent possible. first, key features of the new defense strategy such as the ones i've described. second, forces forward deployed to the asia pacific and persian gulf for possible near-term

contingencies. for example, the ability to, as we say, fight tonight if there's aggression on the korean peninsula. third, military family programs. and, fourth, certain acquisition efficiencies like multiyear contracts. but we cannot exempt or protect most of our budget. and so you see, serious repercussions of sequester appearing as the months go by. now, you might ask why does this turbulence hit so hard so fast? why does an 8% sequester budget cut lead to a crisis in readiness as joint chiefs of staff have so aptly called it? to understand this requires some explanation. is sequestration commenced on march 1st, and as i noted, reduce dod funding for fy-13

by $37 billion. now, about 20 billion of that $37 billion in cuts affections our operations and maintenance, or o&m accounts. the accounts that post influence day-to-day military readiesness. readiness. but it gets worse for o&m. the wartime or oco budget is also subject to sequestration. and most of this must come from the same o&m accounts. to protect funding for our troops at war, which is a must, we have to impose extra cuts on the base budge portion of o&m -- base budget portion of o and m. worse yet, two years ago when we were estimating the costs of wartime operations, we could not foresee the higher-than-expected operating tempo and transportation costs that we are

experiencing the year. so now we have to make further cuts in base budget o&m in order to sustain wartime operations. so the bottom line is cuts in the base budget portion of o&m will be more than 20% compared to our request. and we have only about six months left to accommodate post of these cuts. -- most of these cuts. so much for the 8% sequester cut. we realized last january before sequester kicked in that we had potentially large budget problems, and we began taking action then. we imposed hiring freezes, cuts in travel and conferences, reductions in facilities maintenance and much more. now that sequester is in effect, we are preparing a request to congress to move money from other accounts into o&m called reprogramming. we will be urging congress to approve that reprogramming

quickly. but unfortunately, this won't be enough. reprogramming will help with much of the wartime o and p funding -- o&m funding program, but by law reprogramming is limited, and it's not large enough to address the sequester. we will still have to make large cuts in training and maintenance which in turn are seriously harming readiness. in short, the reprogramming addresses the war costs but not sequester. and understand it's the effects of all this, let me start with the army. among numerous training action, the army plans to cancel at least six remaining combat center sessions for its brigade teams. these are the culminating training events, and their cancellation seriously harms readiness.

by the end of the fiscal year, excluding deployed units, two-thirds of army active brigade combat teams -- two-thirds -- and most of the reserves will be below acceptable readiness levels. this means that we are less ready for contingency operation, and it may interfere with our ability to replace units in afghanistan next year. the air force has or will soon stop all flying for 12 combat coded squadrons which means about one-third of its active squadrons will be markedly less ready to meet contingency demands. the air force is also reducing or stopping training at numerous other squadrons. this is not only dangerous, it will also be expensive to repair the damage. once you lose flying proficiency, it is very expensive and time consuming to get it back. the navy and marine corps are also cutting back on flight operations and fleet operations. the navy has imposed flying

restrictions on some nondeployed carrier air wings, and as you've seen, we're not sending ships to sea as we had planned. as the navy cuts back on maintenance support and steaming days, there will be fewer opportunities for the marines to train which will in turn degrade their readiness. finally, we may have to consider furloughing many of our civilian employees in order to hold down operating costs. secretary hagel has not made a final decision on furloughs, but if we have to impose them, they will harm morale and productivity throughout most of our support functions. and this will in turn further damage readiness. what's tragic in all this, all damage to readiness and national securement, is that it's not a result of economic emergency or a recession in this country. it's not because defense cuts are the answer to the nation's overall fiscal challenge.

do the math. it's not in reaction to a sudden transformation to a more peaceful world. it's not due to a breakthrough in military technology or to a new strategic insight of some sort. it's not because paths of revenue growth and entitlement spending have been explored and exhausted. it's purely the collateral damage of political gridlock. of -- we have and will still have the most formidable military in the world, but we are accepting unnecessary risk. now, the sequester for fy-2013 ends on october 1st. but there's no way to foe for sure what's next -- to know for sure what's next here in washington. the dod can adjust and adapt to a wide range of contingencies, but this will be easiest if we have stability,

time and flexibility. the president has submitted a budget that meets these goals. the president's budget reflects his overall approach to deaf state reduction. -- deficit reduction. for defense it contains $150 billion more in ten-year cuts compared the last year's plan on top of the 487 billion reflected in the department of defense's fiscal year 2013 budget. most of these cuts occur beyond 2018 which gives us time to plan and adjust. while no agency wants to cut its budget, the president's plan is much more practical than the cuts that would occur under the budget control act. cuts that could amount to to $52 billion in fy-2014 alone and a total of $500 billion over the next ten years. we urgently need congress to grant us stability, time and flexibility. the house budget resolution, the

senate budget resolution and, of course, the budget control act all confront us not with stability, but with an exceedingly wide range of future scenarios for our budget. we also need congress' support to have the flexibility to make budget cuts where they are most in the interests of long-term national defense. last year congress denied proposals we had made ranging from health care efficiencies to force structure and modernization proposals that our leadership had proposed and comprehensively justified. most immediately, additionally, we need reprogramming relief from congress for fiscal year 2013 in order to shift money to meet our highest priorities. ideally, we will have all three elements -- stability, time and flexibility -- with which to make critical budget decisions. but we must anticipate a wide range of possible contingencies.

in this regard, for the this reason, secretary hagel asked me working with chairman dempsey to conduct a strategic choices and management review to examine the choices that underlie our defense strategy, posture and investments including all past assumptions and systems. the review will define the major strategic choices and institutional challenges affecting the defense posture in the decade ahead that must be made to preserve and adapt our defense strategy, and the department's management under a wide range of future circumstances that could result from a comprehensive deficit reduction deal or the persistence of the cuts that began with this year's sequester. everything will be on the table during this review; roles and missions, war planning, business practices, force structure, personnel and compensation, acquisition and modernization

investments and how we operate, how we measure and maintain readiness. we plan to complete our work and provide decision points and recommendations to secretary hagel in the coming weeks and months. the choices the secretary and the president make in response to decision points identified in the review in the months thereafter will then inform our fiscal year 2015 budget submission as well as how we execute our fiscal year 2014 budget. so in closing, we in the defense d. are prepared to make difficult strategic and budgetary choices. we're also committed to finding new ways to improve the way we do business and obtain greater efficiency and productivity in defense spending. but in order to sustain our military's unrivaled strength, we need the cloud of sequester dispelled. not just moved to the horizon. and we need a return to normal

budgeting. together with the congress, we can then continue the great strategic transition upon which we have embarked with certainly and stability. thank you. [applause] now i'd be pleased to take some questions. >> if you would, please, stand up, identify yourself. please stick to the subject at hand, too, if you would. >> thank you. sebastian springer -- [inaudible] you mentioned counterspace activities. >> uh-huh. >> just a clarification on what's going on in that space, and ten looking forward, what changes do you see in the deployment to have guard and reserve both in terms of division and labor with the active forces and cost effectiveness? >> both excellent questions. first of all, with respect to space the -- we have established really for the first time an integrated effort to bring

together our space programs, all of them, with those folks who understand best the antisatellite threat and also how we can operate if we have to without spacecraft. so we have an integrated effort now that looks constellation by constellation. if there is a threat to -- and there are threats -- to those space systems, how can we make them more resilient so that that threat can be withstood, or alternatively, how we can, as we call it, operate through if we don't have that capability. that is a new effort and one that we are devoting resources to newly in this budge, something that is long overdue. and at the same time, we're looking at making investments in our own capability to deny the

use of space against our forces if a conflict. so both sides of that equation we're looking at. with respect to guard and reserve, as i said, the guard and reserve, the reserve component over the course of the last decade has made a really remarkable contribution that nobody foresaw that we would been gauged in a long, long -- be engaged in a long, large counterinsurgency of the kind we've operated for the last ten years. we needed the guard and reserve, and they came through. and there's a lesson in there about the adaptability and the relevance of the guard and reserve component. and so now as we turn this strategic corner to the future, we're looking for innovative ways to use the guard and reserve components in the new, in the new era.

so there are missions, for example, like, oh, i'll just take one example, operation of remotely-piloted aircraft that might be, and in fact, are suited to guard units. there is the homeland defense mission. i'm in a, have had a number of meetings with the council of governors to help them articulate the needs for defense support to civil authorities, some of which -- probable much of which -- will be provoided through the guard and reserve. so in all these ways the guard and reserve are going to be very rell rant. and the future's just going to be different from here than iraq and afghanistan. so that's an exciting sort of frontier for us and for the guard and reserve. >> with hi. john donnelly with congressional quarterly and roll call. question about the strategic

choices in management and view. can you tell us a little bit more about what's going to be involved there? you're going to be looking at alternative budget scenarios. have you decided which ones? for example, the president's budget a, $53 billion -- [inaudible] something else. the senate armed services committee has asked you the describe what a $52 billion cut would look like, and are you just going to lay out illustrative scenarios, or is this actually going to be a set of proposals for things to reduce under these alternative scenarios? >> well, your a and b, yes. obviously, the president's -- yes, and others as well, others sort of in between, if you like. the, we have to pore see -- foresee, and that's where senators levin and inhofe, that's what they were indicating in their letter that much as none of us might like that, we

have the take seriously the possibility that we stay, that what happened this year could happen again. be and again and again. and it's in our dna to be ready even for things that we don't like, and that is why -- and to get ahead of that is why secretary hagel ordered the review. be so that we're ready for a whole range of contingencies of that, certainly the two that have you've named. and in terms of the output, i mean, we're not going to be headaching -- making a proposal to be sequestered, but i think what you really mean is what is the product. and the product is the, is a clear delineation of the choices that we can make and might have to make in each of the areas

i've described whether they be an element of force structure or an element of investment or in compensation or in health care or in, um, headquarters support. all of these areas where we spend money, how can we do things differently, how might we have to do things differently in order to give the country the defense it needs for the amount of money we're going to get in each of those scenarios? that's the purpose of it, and that's what it'll do. >> hi, michael -- [inaudible] with aviation week. following up on john's question, these different scenario, will they involve simply actions that will all require congress' help, or will some of them, will you be outlining a lot of thing that is the department can do itself? >> sure, there's a lot of things we can do ourselves. i mean, at the end of the day,

of course, the congress is the, approves and passes our budget. in that a -- in that sense they have to approve everything that we do. but a lot of this is stuff where we can seize the initiative internally and will and need to. >> hi, sir. chris -- [inaudible] with inside defense. request you cup -- can you update us on what the review has accomplished so far and what work you still have to do before the end of the month? >> it, it has in each and every one of the areas i've described made substantial progress in terms of framing these choices. i would say we have reviewed between a third and a half of them so far this far along. and in some cases they're in reasonably good shape, and in other cases people need to be pushed harder to work harder,

think more be innovatively and be bold wither because -- bolder because at the more extreme range of those contingencies we might face, we have to be bold. yeah. >> [inaudible] having, looking at the f-14 is -- [inaudible] you guys are supposedly working on that. do you have when you're going to present a -- [inaudible] >> this is the oco request for fy-'14, and the answer is in the next but weeks we will make our fy-'14 oco proposal. a lot of the work is done on that. now, of course, when you're doing an oco proposal, you are forecasting the amount of money that you will need in a conflict two years from now.

and that's the reason why these -- it's difficult to prepare an o to co budget. and, of course, the fy-'14 is a transitional year in afghanistan. and so what we'll be doing there will depend upon decisions that the united states and rest of the coalition make in the months ahead. and not all of those decisions have been made. so we're making our best estimates, excuse me, based upon what we know. but, of course, we can't know everything about an ongoing war. >> [inaudible] before you know the president's decision on -- [inaudible] >> i think we'll know a lot of the president's decisions. that still doesn't mean you know everything that's going to happen two years from now in a war. so there's an inevitable amount of estimation that goes into the

preparation -- that's what oco's all about. oco's all about the unpredictable expenditures associated with an ongoing conflict. so it's not a science, but we get pretty, we get pretty good at it after these years. yeah. >> marcus -- [inaudible] with defense news. you mentioned that you need programming relief from congress. are you saying you would like a reprogramming above the $7.5 billion -- >> well, we would. we're not asking more that now. we know that our reprogramming authority is capped. so the reprogramming that we're going to submit will confine itself within the statutory bounds. what i was telling you was that that as a consequence will, if be approved by the congress, will address our coc shortfall problem. -- oco shortfall problem.

it will not address sequestration. i just want to emphasize that point. our reprogramming doesn't take care of sequestration, it takes care of our other big problem which is the oco shortfall. we earnly hope that'll be approved, but there are statutory limits to the reprogramming that can be granted. we would like to see those limits change, by the way, of course. yeah. >> [inaudible] with national journal -- [inaudible] you talked about how you are -- [inaudible] but you've also talked about the president's -- [inaudible] effects on them. and for all three services, all four services. at what point do you start getting concerned that your ability -- [inaudible] will be affected by the shortfall? >> well, that's one of the areas

that we can most clearly identify and protect readiness for. what you see happening elsewhere in readiness, as i've described, is our capability to respond to the unforeseen. and there had been an impact there. and that's why i was saying that this is not only stupid, it's not safe to be under this sequester thing. >> [inaudible] >> well, again, we're going to try to -- we're working as hard as we can to make sure that our commitments to things like the defense of the we this anyones

la is protected -- of the peninsula is protected to the maximum degree possible. we're doing that, and we will keep doing that. but it comes under increasing stress as time goes on. we'll have to see what happens as the years go on. yep. >> mark -- [inaudible] air force magazine. i want to go back to the comment you made about the -- [inaudible] fourth estate. did i hear you correctly, you said that the cost associated with the osd, the jcs and the co-coms together is -- >> no. >> can you explain that a little bit more? >> yes. it's a good question. the fourth estate is a informal term that is meant to signify fourth part of our enterprise other than the department of the army, the department to have navy and the d. of the air force. the department of the air force. these are important functions. they're not headquarters functions, that's a small part of it. they are things like the defense

logistics agency that handles all our logistics including in the theater in afghanistan. so these aren't headquarters, these aren't people like me sitting in offices in this washington. that is included in the fourth estate. and those headquarters functions and so forth. i mean, i believe that we need to shrink those headquarters functions also at least as much as everything else is shrinking. so for sure we must do that, we're gonna do that. but that isn't where most of the money is. most of it is in the so-called field agencies, combat support agencies. they're doing important work. but they're part of our enterprise, and they need to fall under the same level of scrutiny that we have to apply to the navy, the army and the air force in these times. and all i'm saying is we're going to make sure that we don't just pay attention to the army, navy and air force, but we pay

attention to every nickel we spend wherever it is. >> we've got time for -- [inaudible] >> okay. >> hi -- [inaudible] bloomberg news. talk about the fact that -- [inaudible] the navy has told congress that they -- [inaudible] so, one, is the danger of -- [inaudible] somewhat overblown and, number two, the the longer you take to make a decision on -- [inaudible] is that a danger that -- [inaudible] >> the, first of all, none of us wants to do furloughs. it is not a way of signifying to people who are working for us and for national defense, working as hard as our uniformed

people are that their contributions are appreciated. so, you know, nobody wants to furlough. what you're up against and what we're up against and secretary of defense is up against is balancing where we take cuts as the year goes on in the interests of the overall accomplishment of the defense mission. and so one of the possibilities there is to furlough, meaning essentially put on part-time for the last, now, quarter of the year some or most of our civilian employees. that would be a way of trying to

free up funding that would then go to critical readiness functions. and it's assessing those critical readiness functions and where we have to put money in the final months of the year that compels this along with many, many other difficult decisions that we just have to make. but in no way does it suggest that, you know, these folks are anything but essential to the enterprise, otherwise they wouldn't be our employees in the first place. >> [inaudible] the last quarter of the fiscal year -- [inaudible] >> right. i'm -- you're my host. take one more if you want to take one more, and ten i've got to go. >> one more on the budget. do you think it's more likely than not that you'll see a cr again this year, and also that you'll see another round of sequestration? >> i have stopped calling the

odds, chris. but i can't rule it out. and, therefore, we have to be serious about that contingency. that's the reason for the review. so, sadly, i can't, i can't rule that out. be and so we, we have to be ready. that's an unfortunate thing. if it happens. and, obviously, we want our fy-'14 budget enacted in a time way. but looking at recent history, i can't be sure that's going to happen, so we have to be ready in case that doesn't happen. and can we will. >> [inaudible] >> thank you. thank you all very much. [applause] [inaudible conversations] >> what fascinated me, i think, about the situation in afghanistan in '78 and '79 was just how different it was from

what we face today. many things are radically different. there are no radical leftist parties or secular parties in afghanistan today. that's all been pretty much wiped out. but in the 1970s, those were really the powerful forces in afghanistan. the president, mohamed khan, for some of the, for much of the 1970s was a secularist modernizer not unlike the shah of iran. then he was replace inside 1978 by the afghan communists who began trying to remodel society according to their own utopian designs. they very quickly ran aground with that. the whole country rose up against them, and that's why the soviets had to come in. and what's amazing is that that invasion and the almost unending civil war that is followed compounded by the u.s. intervention 2001 and after has completely wiped out that old afghanistan that with saw in the '60s and '70s that was really so radically different.

>> revolutionary islam, a pope visits poland and cracks start to appear in communist countries. christian caryl on 1979 sunday at 9 on "after words," part of booktv this weekend on c-span2. >> the peter peterson foundation's fiscal summit heard this week from former president bill clinton and microsoft's bill gates. this is a little less than an hour. [applause] ♪ ♪ >> imagine we're ready, gentlemen. we had a great conversation, at least a warmup behind the scenes. i have to start off with, i'm a texan. a bit of hon the city here. i want today bring out my tablet

or smartphone for obvious reasons, to have the questions or comments there, but i was afraid that my be tablet would lock up in the presence of bill gate, and i don't think i could live past that. so my notes, mr. gates and president clinton, look a little bit like a second grade art project, but my mother assures me she's going to put them on the refrigerator because this, of course, is history. [laughter] i want to pick up on juan's presentation. i was so struck by his comment that the fiscal debate is taking up all of the oxygen in the room. juan believes we're not able to look at trends ahead because we're mired or being pulled down by ongoing conversation that seems easily resolved with compromise. mr. president, i'll give you the first stab at that. >> well, it's self-evidently true. but the problem is that nature of the debate goes to, one, factual dispute and the core of

the political differences between the two parties in washington today. i actually, i'll tell you what i think, first. i think everybody in this debate has an obligation to say what they believe. i think paul krugman's right in the short run and. peter:rerson and simpson bowles and all those guys are right in the long run. and the question is timing. if don't kick a long-term debt reduction plan in at the right time and we don't pass a plan in advance, then there's always the chance that the economy start recovering, and interest rates will go through the roof, and it'll make this sequester look like a sunday afternoon walk in the park. i mean, don't forget if interest rates today were what they were when i was president -- when they were pretty low considering we had growth -- annual payments would go from somewhere in the range of whatever they were this

year, between 250 and $300 to 650. so we need to deal with this. secondly, because of the debate, because it's stale, it's taken up all the oxygen. but i think that a lot of cuts have already been made, and the short run and the president's offered a long-term plan that even, basically, reflected apparently the private understanding he had with john boehner when they were negotiating. and i think that the best thing to do -- and simpson bowles has done an update can i just read which i think is, you know, pretty good. they need to -- for the simpson-bowles update, it says we shouldn't kick any more real ricks in until 2016 -- restrictions in until 2016 so the economy keeps growing well. it's obvious that the defense cuts and a general restriction on public employment have in the

near term slowed the recovery. it's obvious that if you overdo austerity early, you get europe where their unemployment rate exceeds 12% now. but we need to go ahead and pass a long-term plan and get this off the plate. we're not debating anything about the future now. and if you look at the fix that was done for airline passengers which, since i have to trundle back and forth between here and new york all the time, i appreciate it, it basically is a metaphor, a mini metaphor for the choices made in the sequester where 44% of cuts were from domestic discretionary spending which is 15% of the budge, 38% of the cuts from defense, 4% from the health care and other entitlement programs. and that basically within the budget of of the faa, we're

making it possible for us, all of us to fly with fewer delays and not addressing and um proving the infrastructure of -- improving the infrastructure of regional airports. .. support, tax reform and the whole thing, and you hav have to really get the whole debate about whether there will be any more revenues, i don't see how they're going to get an agreement and will just keep spinning our wheels. >> if we continue to spin the wheels we remain stifled and that brings to -- when you see what's happening, you're not in as big a fortuity and the

sausage making business but you're certainly in innovation and technology. when it boils down to what we can afford and we're so focused on the immediate concerns from the faa do, if you will, the small pieces of the equation. how do we think big and how to invest big in america's future? >> well, people say that oxygen is taking out by the debate. it's kind of strange to me that the health care cost problem, which really is the long-term problem, we have some in terms of retirement obligations because of the age structure change, but overwhelming is the health care cost, which fortunately omb and cdo take the trends are are honest about that's growing faster than the economy, then all you need a little bit of time before that overwhelms your revenue raising capability. so it's interesting that the amount of discussion about how you bend the curve on that

really isn't there. and, in fact, it's not a partisan issue. the partisan issue is given what the cost going to be telling should the government or the individuals have the cost? it's a zero-sum discussion. shifting it back and forth. the real question for our country is, do we stay so much more expensive and on a trendline eat everything else up? and i'm very disappointed the degree of conversation about how you take innovation, how you take measurement and use it to improve that system but it's really not taking place. hoosier favorite person in terms of -- where's your favorite panel? even the efforts, simpson-bowles and others, are fantastic. they are not health experts of the kind of, by the way, you've got to get rid of that infamous growth peace in there at some point. so i wish technocratic or in

some way we are having that discussion. this is a case where innovation can either be your enemy because it's in testing complex things like organ replacement, joint replacement, or to your friends which taking on things like chronic care costs, say getting rid of parkinson's or alzheimer's or diabetes, where you would actually have cost savings. we need to bring in a discussion about how we get the efficiencies driven by a measurement of equality -- quality that is something that in the system today. >> how to get policymakers to think, i was at the final space shuttle launch at kennedy space center and i literally was moved to tears thinking about this country and how we think big. if innovation is not accepted or understood by our policymakers, how do we look for america's next big thing the opportunity,

our next big thing, so the next generation can feel as many as you did in the '60s and '70s, and as i did at the kennedy space center that they? >> well, i will give you a very short answer to that and i would like to amplify on something bill said. that's a whole debate. we are continuing to innovate. there's a stunning amount of advance and human genome since an application in nanotechnology, and lots of other things. we need to do more, and one of the things, one of the few areas that i clearly disagree with the simpson-bowles report on his i think any tax reform should not get rid of the research and development tax credit because we are already less generous than about 15 other countries and we don't need to do that. so we are continuing to debate. we are not continuing to invest. that's in the future, but on the public side, as much as we should. here's the problem with what

bill said. i think about this all the time. this whole debate, this health care debate has been shoehorned into the budget debate, as bill described. and clearly it's crazy for us to pay in a 17.9% of gdp per health care and/or the big risk country pays more than 11.8. that's friends. germany is about 11-point lead. it with a rich countries that pay more than we, are the netherlands and switzerland at 12. so that translates into about a trillion dollars a year. 43% of which comes from the public sector. so the people who say, well, we've got to privatize medicare, or you know, voucherize or whatever they want to do, we and the people who say we have to protect and keep in these phenomenal cost increases to account for both this medical inflation and the delivery system as was the baby boomers getting into the system are

accepting something that's unacceptable. on the other hand, this is the dilemma. if you can forget how to solve this we could make a budget deal i would think. we really need about five years to see whether the drivers in the health care law, which clearly are trying to give incentives for people to be healthier and incentives for the system to deliver health care where you pay for results, not by procedure, to see if that works. the problem is neither of the office of management budget nor the congressional budget office will score it. they want us to score this and do all this health care stuff based on what is a realistic projection of real health care costs if you keep the insurance system, the delivery system, and our lifestyles exactly as they have been and you projected them

out. we have to change all three of those things. and if your not willing to do that we're not going to get anywhere. keep in mind coming 2009 when this economy was on its knees after the crash in '08 him health insurance profits rose over 30%. when everybody was worried about keeping their job, holding on to the business, not losing their home, you know, the engine ground on. and i just read last week that in most, on average if a person is reignited to the hospital because of a problem with the infection that something happened in the first hospital stay, the profit margin on that person to the hospital goes up 300%. wish to display my the system in eastern pennsylvania where the provider eats all the cost if they have to do that, is so successful in holding down

costs. why are we still getting them what is the government still getting medicaid drugs cheaper than medicare drugs? in the are a thousand question to be answered here, but that ultimately, the dilemma is that we are assuming we're not going to change the delivery system, the financing system, or our personal behavior. if we don't change all three of those things we can't get our numbers down to what other countries are. >> mr. gates can you travel extensively of course. you to set a trip to south korea and you look at the delivery system. you're focused with the gates foundation is faxing, paula. we talked about how missing. we look at the domestic debate on health care and what you're seeing abroad in your travels, what stands out most to you? we are mired in the same debate and it seems to be legitimate solutions on the table to be discussed. >> in the health care you can really, there's big differences

between the rich countries, the middle income countries and the low income countries. the low-income countries, which is where our foundation focuses most of its efforts, that's the key missing finger is to have great primary health care where a mother before birth is counseled, first 30 days the infant gets care, vaccinations get delivered, something like the hiv drugs, malaria. and there's very good progress on that, that progress is quite dependent on the generosity, with all the budget deficits not just in the u.s. but also in europe, japan, all the traditional donors, there's a real question whether the aid budget to even stay flat from countries that have been cutting those. so that really hurts low-income countries. the middle income countries, like china, are just beginning to realize how tough the health care costs are.

they've got a lot of in justice because of what's not covered. yet in some ways because they're more open-minded they are trying different things, so there will be good examples that come out of those countries, even the rich country guide should look at. the idea of how to use online, what are the different job categories, how do you measure outcomes, a lot of vibrancy there as they do with the problem. i income countries are all facing the same rate of increase, although we've managed to be at a starting point about 1.5 times worse than everyone else. i got pulled in not because it's a big foundation priority, but at the state budget level where you actually have to balance or at least pretend to balance on a yearly basis, there's some very -- having to do with pensions, if they were in the private sector would be considered out and out fraud.

but because it leads to pretend balance its education that starts to get hurt. and that's our big, our foundation, that's our big domestic focus is quality of the education system. and ironically, in the last 15 years where a lot of additional money went in, we did improve quality. now we've got in the next 15 years where at best because of health care will look flat, potential even down. now have to get quality up and affordability up during the same. it's a pretty daunting problem. but it's one of these things were what is the long-term plan? how do we step back? the states in a way to control enough to really change the medical picture. the scale of their operations, but they require to do because the federal rules. the reform on this one audibly has to come from the federal level.

>> one of the things we're going to have to deal with, i agree with that, is that the price of the health insurance is normally approved by state regulators. and they very often aren't even expert in and they approve these increases. now, the current law says that for small funds, 80% of a persons brain has to go into health care, only 20% to profits or promotions. and for big insured groups is 85%. and that's supposed to be enforced at the national level. it has played a role in the fact that we've had inflation at 4% now for two years for the first time in 50 years. but it's impossible to say what's going to happen when all these new people are insured and everyone assumes that they will include, they will all be in small funds will be 80%, not 85%.

and a lot of them will be older or sicker, and, therefore, the premiums left the least start out higher. and so there's a lot of talk about that now. but i'm agree with bill. the national, we are the only country in the world first of all, let's start with this, the only advanced country in war ine world with an expensive system that doesn't have a national health care budget. if we had a budget, we could do, do with republicans while. we could privatize it all. in the netherlands, for example, 100% of the people have private health insurance. there's no medicare. there's no medicaid. there's no veterans health system. there's no nothing. everybody buys the health insurance and then they get a subsidy according to their income. and it's all individually owned. but they have a health budget in which is why there at 12 and we are at 17-point lead. every time anybody talked about that in the past, i have the

scars to prove it, they were accused of rationing health care. which, of course, we do every day in america. >> you say that the health care debate is shoehorn into the budget debate. one might also say that's happening as well with immigration reform. he recently said you expected to pass but you also make the case for immigration reform, comprehensive immigration reform will help improve the u.s. economy. you might also know there was report just out yesterday come heritage foundation said 6.3 trillion in new spending and entitlement as well as social programs will be sucked out of the american budget, if you will, if comprehensive immigration reform is passed. obviously, your comment is the u.s. economy will improve. >> i disagree with that. for one thing it shows only the downside and the worst-case downside scenario, with none of the upside for immigran.